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| Bank of America Announces Home Lending Guidelines |
Posted: 2008-04-23 12:03:58 |
CHARLOTTE, NC -- New guidelines to promote affordable, responsible home lending Bank of America said today it expects to implement new lending guidelines in its consumer mortgage business as soon as is practical after it combines operations with Countrywide Financial Corporation.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b )
Following the purchase, which is expected to close in the third quarter, Bank of America will continue to offer a broad range of mortgages to meet the needs of qualified borrowers, while evolving lending practices to reflect a dramatically different mortgage environment.
"Putting and keeping Americans in their homes ensures the continued prosperity in the communities we serve," said Bank of America Global Consumer Credit Executive Bruce Hammonds. "We believe this purchase is a positive step forward because it offers customers access to a full range of banking services, best-in-class mortgage products and offers the trust and integrity that customers, associates and shareholders have come to expect from Bank of America."
In testimony before the Federal Reserve in Chicago, Bank of America unveiled new mortgage lending guidelines. Following the purchase, the combined mortgage business plans to continue to offer retail customers the following types of first lien mortgages:
-- Conforming loans underwritten to standard guidelines of
government-sponsored enterprises and the government, including FHA and
VA loans and other loans designed for low-and moderate-income
borrowers.
-- Interest-only fixed-rate and adjustable-rate mortgages (ARMs) that are
subject to a 10-year minimum interest-only period, which lessens the
possibility of short-term payment shock.
-- Fixed-period ARMs that provide borrowers low initial rates with the
security of fixed payments, subject to protections against steep
increases in payment amounts.
The company also said it expects to continue its long-established policy of not originating subprime mortgages. Following the purchase, Bank of America expects to make the following changes to certain home loan products offered by the combined mortgage business.
-- Discontinue non-traditional mortgages where monthly payments may not
cover all interest, or so-called option-ARMs.
-- Significantly curtail other non-traditional mortgages, such as certain
low documentation loans.
-- Implement enhanced borrower protections soon after completion of the
Countrywide purchase, including limits on prepayment penalties and
protections on non-traditional loans such as interest-only and hybrid
ARMs, which limit the risk of future payment shock and provide
long-term affordability.
"We think it's important to clearly explain the changes in mortgage lending practices once we operate as a combined company," Hammonds said. "We recognize this tightening, by definition, restricts the availability of credit to some borrowers. However, this will help ensure that those who get loans can afford to repay them.
"Along with these responsible mortgage products, we will provide customers with the tools to understand and make informed choices about what product is best for them," Hammonds said. "This will be achieved through a combination of sales practices, borrower education, disclosures and fair product terms."
Additionally, the Bank of America Charitable Foundation and Countrywide today announced they plan to provide $35 million in grants and low-cost loans to both help local and national nonprofit organizations engaged in foreclosure prevention, and to purchase vacant single-family homes for neighborhood stabilization. The goal, through 2009, incorporates foreclosure prevention efforts by both financial institutions.
Under the program, the foundation has already allocated $10 million in direct grants to enhance the capabilities of nonprofit organizations focused on foreclosure prevention counseling and mitigation to assist an increasing number of distressed homeowners seeking assistance with interest rate adjustments. An additional $20 million will be directed toward grants as well as lending and investing efforts in communities impacted by foreclosures.
"Foreclosures have devastating social and economic consequences for families and communities," said Andrew D. Plepler, president, Bank of America Charitable Foundation. "Both Bank of America and Countrywide recognize that we have a shared responsibility to strengthen our neighborhoods by helping keep individuals and families in their homes. We are pleased to do our part to address this ongoing crisis."
Countrywide, in conjunction with its community partners, has allocated $5 million for neighborhood stabilization and foreclosure prevention through 2008.
Bank of America
Bank of America is one of the world's largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,500 ATMs and award-winning online banking with nearly 25 million active users. Bank of America is the No. 1 overall Small Business Administration (SBA) lender in the United States and the No. 1 SBA lender to minority-owned small businesses. The company serves clients in more than 150 countries and has relationships with 99 percent of the U.S. Fortune 500 companies and 83 percent of the Fortune Global 500. Bank of America Corporation stock (NYSE:BAC) is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.
Bank of America Corporate Philanthropy
Building on a long-standing tradition of investing in the communities it serves, Bank of America is in its fourth year of achieving an unprecedented 10-year goal to donate $1.5 billion to nonprofit organizations engaged in improving the health and vitality of their neighborhoods. Funded by Bank of America, the Bank of America Charitable Foundation is one of the most generous financial institutions in the world and the second largest donor of all U.S. corporations in cash contributions. Bank of America approaches giving through a national strategy called "neighborhood excellence" under which it works with local leaders to identify and meet the most pressing needs of individual communities. Through Team Bank of America, bank associate volunteers contributed more than 650,000 hours in 2007 to enhance the quality of life in their communities nationwide.
For more information about Bank of America Corporate Philanthropy, please visit www.bankofamerica.com/foundation .
www.bankofamerica.com
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| Notes:
First Call Analyst:
FCMN Contact:
Photo: http://www.newscom.com/cgi-bin/prnh/20050720/CLW086LOGO-b
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, photodesk@prnewswire.com
Source: Bank of America
CONTACT: Scott Silvestri of Bank of America, +1-980-388-9921,
scott.silvestri@bankofamerica.com
Web site: http://www.bankofamerica.com/
http://www.bankofamerica.com/foundation
About This Release
If you have any questions regarding information in this press release, please contact the organization listed in the press release. Issuers of press releases and not TCI are solely responsible for the accuracy of the content.
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